Asset owners continue to favour equities (42%) and fixed income (27%) in their portfolios but alternative investment allocations continue to increase, with private market assets making up 13% of the average portfolio and 86% of portfolios having some investment in private assets.
Those were the key findings of a survey by Northern Trust, “Asset Owners in Focus: Global Asset Owner Peer Study 2025,” examining the investment and operations strategies employed by institutional investors worldwide to meet challenges ranging from rising market volatility and evolving regulations to accelerating technological changes.
Based on a survey of 180 global asset owners, with investment portfolios ranging from US$1bn to over US$500bn, the findings highlight a growing focus on alternative investments, operational efficiency, liquidity and risk management and the increasing role of technology and data in decision-making.
Liquidity management has also taken on greater focus with 60% of asset owners noting that liquidity has become more important and cash allocations averaging 11% of portfolios globally.
“Today’s asset owners maintain sophisticated portfolios in a time marked by economic and geopolitical uncertainty – and must execute their investment strategies while efficiently managing costs and navigating the regulatory environment,” said Melanie Pickett, head of Asset Servicing, Americas at Northern Trust.
“Our data offers asset owners in North America valuable insights into their peers’ current priorities and trends shaping the market. These insights can help investment and operations leaders benchmark their strategies and understand where peers are focusing resources as they chart a course for their own organizations.”
The survey gathered responses from senior leaders of pension funds, outsourced CIOs and multi-managers, family offices, sovereign wealth funds, endowments, and other institution types across the Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific) regions.
The findings reveal how asset owners are aligning their strategies with market and operational challenges, including:
Asset Allocation
The vast majority (86%) of respondents invest in private markets, while 68% invest in hedge funds, absolute return investments and other diversifiers.
Private debt is now a mainstay in many institutional portfolios, with commercial real estate, private credit and direct lending, and residential real estate the most popular sectors.
Cryptocurrencies and other digital assets are invested in by 21% of those that allocate to private markets.
Risk Management
Interest rate changes, geopolitical and domestic political instability are top external investment challenges, followed by investment fees and the effects of climate change.
Liquidity risk is the most important risk metric, ranked as a top-three concern by 54% of respondents.
Technology, Operations and Outsourcing
Asset owners are focused on efficiencies and automation, hiring and retaining talent, and harnessing the power of artificial intelligence.
For those with outsourced investment operations, the most outsourced functions are document management and regulatory reporting (both outsourced by 49%), trade execution (45%), performance and analytics reporting (45%), and accounting administration for alternative investments (45%).
The study indicates some regional differences among asset owners, with EMEA and APAC allocating lower amounts to equities and more to cash than their U.S. counterparts. Regional differences also emerged in risk metrics, technology investment and other areas covered by the survey.
“Asset owners in EMEA are increasingly recognizing the value of technology in addressing both operational and investment risk,” said James Wright, head of Asset Owners, EMEA at Northern Trust.
“The trends we’re seeing in EMEA align closely with the survey findings, particularly around the growing importance of technology and enhanced risk management.
“As regulatory pressures rise and the need for more robust data management grows, asset owners are looking to strengthen their decision-making capabilities and adapt to evolving regulatory landscapes. This shift is reflected in how asset owners are integrating technology to optimize operations and manage risk more effectively.”
Asset owners are particularly focused on portfolio analytics tools (51%) and compliance and regulatory reporting (48%) as top areas for increasing their technology spending.
Additionally, 50% believe technology product implementation and target operating model design from a service provider would be the most effective way to improve operations, while 43% say better integration of applications from providers would be the most valuable enhancement.
“In APAC, asset owners are relying on outsourcing and technology adoption to drive operational efficiency,” said Angelo Calvitto, head of Asia-Pacific at Northern Trust.
“Many asset owners are leveraging service providers to scale their operations and focus on core activities, particularly in areas like administration for alternative investments.
“This aligns with the region’s interest in increasing technology adoption to drive efficiency. It’s clear that outsourcing is playing a key role in helping asset owners streamline processes and enhance overall operational performance.”
